SOCAR eyes to earn up to $150M from carbamide plant per year

16 November 2017 17:06 (UTC+04:00)

By Aygul Salmanova

President of Azerbaijan’s state oil company SOCAR Rovnag Abdullayev talked about the plans and made remarks on a number of projects carried out by the company during the reception of the American Chamber of Commerce in Azerbaijan (AmCham) in Baku on November 16.

Abdullayev noted that SOCAR plans to earn $140-150 million annually as result of the operation of its carbamide plant in Sumgayit, which is expected to release its first products during the first quarter of 2018.

SOCAR’s president said that the carbamide plant will be constructed in late 2017.

“The carbamide plant construction project is worth $750 million,” he said. “Production will be launched at the plant in January-June 2018.”

The plant will have a capacity to produce 1,200 tonnes of ammonia per day and 2,000 tonnes of urea per day. A quarter of products is planned to be supplied to the domestic market. The remaining volume will be exported, in particular to Turkey, Georgia and the markets of the Black Sea and the Mediterranean.

Samsung Engineering Co., Ltd. won the tender for the carbamide plant construction. The company acts as a general contractor, but it has no license for ammonia production, which will be an intermediate product in the carbamide production process. Therefore, the corresponding licensing agreements have also been signed with Danish Haldor Topsoe company concerning ammonia production and Netherlands’ Stamicarbon B.V. concerning carbamide production.

The plant will consume electricity in the volume of 25-26 megawatt per hour. Meanwhile, 1.3 million cubic meters of gas will be required per day for the full operation of the carbamide plant.

At first, construction work was financed through the state budget funds. Around 205 million manat ($120 million) was allocated till early 2015. But later a decision about project financing was made and negotiations with banks were launched.

As a result, a 500 million euro credit line was opened by Korea Eximbank under the state guarantees of Azerbaijan to complete the construction. Eximbank directly allocates 251 million euros. Moreover, 249 million euros are allocated by three commercial banks UniCredit, Societe Generale and Deutsche Bank with Eximbank’s support.

Speaking about the revenues from the export of products within the framework of the SOCAR Polymer, the project being implemented in the Sumgait Chemical Industrial Park (SCIP), Abdullayev said that the revenues for the whole period of the plants' activity are forecasted at the level of $8 billion.

SOCAR Polymer is the largest petrochemical project in Azerbaijan in the last 40 years, according to Abdullayev.

“The project, which will be launched in the first half of 2018, will reduce the dependence on imports of such products, increase export potential and will allow diversifying the export routes. Some 30 percent of the products will go to the local market, and the remaining 70 percent to Turkey, Europe and other markets,” he said.

Total cost of the SOCAR Polymer project is $750 million. At the first stage, its production capacity will total 120,000 tons of polyethylene and 180,000 tons of polypropylene. The total capacity may reach 570,000 tons by 2021.

Abdullayev went on speaking about Petkim petrochemical complex, which is a subsidiary of SOCAR in Turkey, saying that its profit grew 169 percent for three quarters of 2017 compared to the same period last year and amounted to $266 million. 

“Since 2008, when Petkim’s controlling stake was acquired by SOCAR, and by 2016 we managed to increase the complex’s revenues by 4.8 times, assets by 3.7 times, and share capital by 2.6 times,” he noted.

It is noteworthy that SOCAR began its activity in Turkey after privatization of Petkim Holding in 2008 and has been operating under brand name of SOCAR Turkey. The company was acquired by SOCAR as a result of a tender of privatization.

Petkim shareholders include SOCAR Turkey Petrokimya A.Ş. with a share of 51 percent, SOCAR Turkey Enerji A.S. with 1.32 percent and 47.68 percent within free float.

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